The agreement sets out how TAP will construct and operate the pipeline and defines the respective obligations of parties involved. Specifically, the agreement provides TAP with a tax regime for 25 years from the start of commercial operations. Construction will start mid-2016.

“The European Commission has found the Host Government Agreement between the Greek authorities and the Trans Adriatic Pipeline to be in line with EU state aid rules,” the EC said. “The project will improve the security and diversity of EU energy supplies without unduly distorting competition in the Single Market,” it added.

The TAP pipeline is meant to transport natural gas from the Shah Deniz 2 field in Azerbaijan to Europe. The approximately 870 km long TAP will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in southern Italy.

“Today’s approval of the TAP agreement is an important step towards completing the Southern Gas Corridor,” said Maros Sefcovic, vice-president responsible for Energy Union.

“The Energy Union framework strategy of February 2015 identified this project as a key contribution to the EU’s energy security, bringing new routes and sources of gas to Europe,” added Sefcovic.